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Sugar output in India set to fall on dry weather, says Kingsman

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Sugar output in India, the world's second-biggest producer, may be less than forecast next year as a drought threatens to in some areas, lowering exports, broker said.

Production may total 25 million tonnes in the year starting October 1, compared with 25.5 million tonnes forecast in June, Kingsman said. The estimate matches those by the Indian Sugar Mills Association and the Ltd. Output this year is set to total 26 million tonnes, it said. A smaller crop and a rally in domestic prices may reduce the availability of Indian sugar for exports, potentially narrowing a global surplus and supporting prices. Overseas sales may slump 43 per cent to 2 million tonnes next season from 3.5 million tonnes this year, Kingsman said.

Sugar prices on the National Commodity & Derivatives Exchange Ltd in Mumbai surged 26 per cent since the end of May on speculation below-average monsoon rain in more than 50 per cent of India will hurt crops from cane to rice and cotton. Futures climbed to Rs 3,672 ($66) on August 4, the highest level since December 2010. The harvest in Maharashtra state, the biggest producer, may drop to 7.5 million tonnes to 7.6 million tonnes next year from 9 million tonnes this year, Kingsman said.

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